Legislative Update
House Appropriations Subcommittee Fully Funds Transit Program for FY 2007 at Record Level

House Adds $50 Million to Transit Security Funding in Homeland Security Bill

June 2, 2006

The House Appropriations Subcommittee on Transportation approved the draft Fiscal Year (FY) 2007 Transportation, Treasury, and Housing and Urban Development, the Judiciary, District of Columbia, and Independent Agencies Appropriations bill on May 25. While the subcommittee will not release the official committee report or legislative text until the full House Appropriations Committee marks up the bill on June 6, available information indicates that the bill funds Federal Transit Administration (FTA) programs at the record-high $8.975 billion level authorized and guaranteed by SAFETEA-LU (P.L. 109-59) for FY 2007. The bill provides a 5.5 percent increase over the final amount appropriated for FY 2006.

ACTION CALL!

Please contact your Representative:

Ask your Representative to support full funding of transit programs at the $8.975 billion level in the FY 2007 Transportation Appropriations bill, as approved by the Transportation Appropriations Subcommittee.

Thank Representatives who voted “aye” on the Lynch/Holt/Castle Amendment to the FY 2007 Homeland Security Appropriations bill (H.R. 5441) for their support of transit security funding. Their vote added $50 million to the transit and passenger rail security grants program in the bill (see Roll Call Vote 216 for individual voting records).

Urge your Representative to support the funding for transit properties affected by Hurricane Katrina in the Senate version of the supplemental appropriations bill for Iraq and Hurricane Katrina recovery (H.R. 4939).

Please contact your Senators:

Ask your Senators to support full funding of transit programs in the FY 2007 Transportation Appropriations bill at the $8.975 billion level authorized and guaranteed by SAFETEA-LU.

Ask your Senators to support transit security funding in the FY 2007 Homeland Security Appropriations bill at no less than the $200 million level adopted under the Collins Amendment to the Senate’s FY 2007 budget resolution.

Urge your Senators to support the funding for transit properties affected by Hurricane Katrina in the Senate version of the supplemental appropriations bill for Iraq and Hurricane Katrina recovery (H.R. 4939).

While the subcommittee announced its intention to fund FTA programs at their authorized and guaranteed levels, the bill reportedly provides no funding for the small starts program in FY 2007, directing these funds to the existing new starts program instead. The FTA has not completed its rulemaking for this newly-created program for smaller fixed guideway projects such as street cars, commuter rail, and bus rapid transit lines. The Administration’s budget proposed to set funding for small starts at half of the authorized level in FY 2007, reducing overall funding by $100 million below the authorized level.

With regard to commuter rail, Northeast Corridor and Amtrak issues, the status of any provisions in the bill are unknown. The Administration’s budget proposal called for commuter railroads to assume a higher portion of capital and maintenance expenses on the Amtrak-owned portion of the Northeast Corridor, and the FY 2006 Transportation Appropriations law (P.L. 109-115) directed the Department of Transportation (DOT) to establish new fees on these commuter rail operators. APTA has opposed these efforts because commuter railroads already pay a fair share of Northeast Corridor costs as established through carefully negotiated legal, financial and operating agreements involving substantial state investments.

APTA will provide details as more information becomes available. In the meantime, for information on the FY 2007 Transportation Appropriations, please contact Rob Healy of APTA’s Government Affairs Department at (202) 496-4811 or email rhealy@apta.com. For more information on Northeast Corridor or Amtrak issues, please contact Art Guzzetti of APTA’s Government Affairs Department at (202) 496-4814 or email aguzzetti@apta.com.

Homeland Security Bill Advances in House—Floor Amendment Adds $50 Million for Transit Security

The House of Representatives began consideration of the FY 2007 Homeland Security Appropriations bill (H.R. 5441) on May 25. During consideration of the bill on the House floor, the House agreed to an amendment that increased funding for transit and passenger rail grants by $50 million, raising total funding in the bill for these programs to $200 million. The amendment, which was sponsored by Representatives Peter Lynch (D-MA), Rush Holt (D-NJ) and Michael Castle (R-DE), was approved by a 225-197 vote, with the bipartisan support of 183 Democrats and 41 Republicans (Roll Call Vote 216, U.S. House of Representatives, 109th Congress, 2nd Session). The original version of the bill as reported out of the House Appropriations Committee contained only $150 million for transit and passenger rail security grants, the same amount provided in the FY 2005 and FY 2006 Homeland Security Appropriations laws (P.L. 108-334 and P.L. 109-90).

The House did not complete consideration of the FY 2007 bill on May 25 and is expected to complete the measure after the week-long Memorial Day recess. In the Senate, the Appropriations Committee has not scheduled its subcommittee markup of the FY 2007 Homeland Security bill yet.

Senate Committees Introduce Joint Transportation Security Authorization Bill

The leadership of the Senate’s Banking and Commerce Committees has introduced a broad authorization bill for transportation security. The measure, S. 2791, combines the port, cargo and rail security provisions of the Senate Commerce Committee’s S. 1052 and the transit security provisions of Banking Committee’s S. 2032. Over the next three fiscal years, the bill authorizes $3.5 billion for transit security, $1.2 billion for rail security and $728.6 million for port and cargo security.

Commerce Chair Ted Stevens (R-AK) formally introduced the bill on May 11 with a bipartisan group of 41 other Senators serving as cosponsors, including Commerce Ranking Member Daniel Inouye (D-HI) and Chairman Richard Shelby (R-AL) and Ranking Member Paul Sarbanes (D-MD) of the Banking Committee.

For more information on transit security issues, please contact Tom Yedinak of APTA’s Government Affairs Department at (202) 496-4865 or email tyedinak@apta.com.

House - Senate Conferees Weigh Transit Aid in Supplemental Appropriations Bill

House and Senate negotiators spent last week crafting a conference committee report to reconcile differences between the two versions of an emergency supplemental spending bill for Iraq and Hurricane Katrina recovery. The Senate’s version of the Emergency Supplemental Appropriations Act for Defense, the Global War on , and Hurricane Recovery, 2006 (H.R. 4939) as passed by that chamber in a 78-20 vote on May 4, includes $200 million for the emergency response and recovery of public transportation in areas affected by Hurricane Katrina. The bill also includes provisions that would waive local share requirements and operating restrictions for federal grants to the affected agencies, giving relief to providers whose local tax base and other resources normally used to cover the local share have been reduced dramatically.

The outcome of negotiations over transit funding and other differences in the House and Senate bills is far from certain. House and Senate negotiators have agreed to hold spending in the bill to $94.5 billion, the level called for by President Bush, but that level is considerably less than the $108.9 billion in the Senate bill. In addition, Clay Johnson, acting director of the Office of Management and Budget, sent a letter on May 18 to House Appropriations Committee Chairman Jerry Lewis (R-CA) reiterating the President’s opposition to funding for numerous programs, including the $200 million for transit. Conferees failed to submit a reconciled bill to the President before the Memorial Day recess, but they are expected to complete the bill once they return next week.

For more information, please contact Rob Healy of APTA’s Government Affairs Department at (202) 496-4811 or email rhealy@apta.com.

Tax Bill May Impact Transit SILOs/LILOs

The Tax Increase Prevention and Reconciliation Act of 2005 (PL 109-222; H.R. 4297), signed by President Bush on May 17, 2006, includes language that could affect transit agencies that entered into Sale In/Lease Out or Lease In/Lease Out (SILOs or LILOs) agreements. While the application of the new law to transit agency SILOs and LILOs is still somewhat unclear, the law imposes an excise tax of up to 75 percent on proceeds that are attributable to a listed transaction (as determined by the Treasury Secretary) and that are properly allocable to a taxable year on “tax-exempt entities” that participate in what are referred to as “prohibited tax shelter transactions.” While the provisions were part of the Senate-passed bill, Senate Finance Committee staff indicated that they were not intended to affect transit SILOs and LILOs, but rather charitable organizations participating in such prohibited tax transactions. The law specifically exempts from its application those transit transactions that were permitted under the American Jobs Creation Act of 2004. APTA is working to determine the impact of the law on transit agencies and how best to counteract it.

The same law also includes provisions that require the U.S. Government, and state and local governments, and political subdivisions of those governments, beginning in 2011, to withhold a tax equal to 3 percent of their payments to most vendors and contractors, for goods or services, if such entities spend more than $100 million per year on goods and services. APTA is working with organizations that represent state and local governments on this issue.

For more information on the Tax Increase Prevention and Reconciliation Act of 2005, its effects on SILO and LILO agreements and any other related issues, please contact Rob Healy of APTA’s Government Affairs Department at (202) 496-4811 or email rhealy@apta.com.